What Will Russia Bring to the WTO?

It is already decided that Russia will incorporate into the WTO; however, when and on what conditions? According to some forecasts, the incorporation may take place either next year or in 2007, depending upon the incorporation conditions.

It may happen that one morning we will wake up and see ourselves in quite a different country living according to different laws and regulations. What kind of life is it going to be? We should think about it and get ready for this new life now. With this view, the Tatar-American Regional Institute suggested that an international scientific conference “Marketing, Production, Sale: Topical Theoretical and Practical Problems” should be held. The Tatarstan Academy of Sciences and several ministries approved of the idea. Many scientists, governmental officials, and businessmen took part in the conference. President of the Tatar-American Regional Institute Dilyara Shakirova spoke at the forum’s opening and reported interesting facts published by UNESCO. As it turned out, the number of European adults getting advanced training is already larger than the number of students and pupils. Isn’t it this the reason why the European economic model is so much effective?

Where Are We?

Before thinking about where to go, Russia should first define where it is now. Unfortunately, for the past 20-30 years Russia has become much weaker on the international scene in practically all spheres of life. Within the above-mentioned period, spending on science has been reduced 30 times, and on education, it has been reduced 25 times; as a result of this sad situation, about 100,000 talented scientists left for abroad. At a time when up to a half of the GDP in the developed countries is spent on science, only 10% of GDP is spent this way in Russia.

Academician from the Tatarstan Academy of Sciences Mirza Makhmutov supports the point of view of several Moscow economists and says that after the breakup of the USSR, the country followed a wrong development strategy, one imitating the US revenue policy. Russia’s income tax makes up only 15% of the GDP, but the rent is 70%. However, the Russian government already owns neither oil, nor gas, nor gold or diamonds any more; they are leased out to oligarchs who send raw materials abroad. As a result, 60% Russians are living in poverty (the average Russian wage is 30-40 USD per month, when the figure makes up 400-450 USD in the West). And the authorities somehow manage to form a state budget by raising taxes on these miserable wages.

Director General of the Tatarstan Agency for Entrepreneurship Development Alexander Sergeyev thinks that even this tax regime allows one do business rather successfully. He adds that Russian people are to blame themselves for the low wages they are getting: he recommends working harder. And the director general supplied his words with a picturesque example: Yugoslav specialists in Russia are paid two or even three times more than Russians. And nobody will pay Russian specialists more. Why? Yugoslav specialists perform better and quicker. So, the conclusion is that if people want to be paid more, they should learn how to work better.

Successful businessmen agree. Russia’s entry into WTO scares those enterprises that produce noncompetitive goods, because incorporation into the international trade organization means that all Russian goods should be meet international quality standards and, what is more important, ecology standards. Some goods such as tires produced in the Tatarstan city of Nizhnekamsk, KamAZ trucks, and Tatar bread are already now in low demand, but after incorporation into the WTO, they may be out of demand completely. Why is it so problematic to sell KamAZ trucks? They are unfit for international transportation as they don’t meet the international standards prescribing that trucks must be powerful enough to carry up to 40 tons of freight, which makes up a railway freight car. The trucks produced at the Naberezhnye Chelny enterprise, KamAZ trucks, cannot carry such weight. Mobile GAZelle and ZIL automobiles suit better for transportation of goods inner-city and long-distance transportation inside the country.

As for bread, how to buy grain if its prime cost is higher than the selling price? It is possible to develop agriculture in a different direction. According to Sergeyev, the demand for the apple varieties that grow in Tatarstan is currently great enough.

Fears and Hopes

The obligations that Russia assumes upon entering into the WTO will fall upon enterprises and the regions first of all. What will they have to face in this case? The Russian Academy of Sciences developed a detailed forecast, and specialists held a poll at 100 Tatar industrial enterprises to adjust the forecast to the conditions of Tatarstan. Deputy Minister for Trade and Foreign Economic Cooperation of Tatarstan Rinat Urzayev says that if Russian laws and regulations become more clear and transparent for foreign financiers, they will invest more in the Russian economy. However, many leaders of industrial enterprises are apprehensive about competition, and they expect to get governmental support and protection.

Prices for energy sources are the stumbling block during the negotiations concerning Russia’s entry into the WTO: Russian prices for energy sources are 5-6 times lower than in Europe. This is the item where no concessions are allowed only because of Russia’s particular energy structure. For instance, unlike the West, Russia has many hydro- and nuclear power plants generating cheap energy.

Another sore point is changing the customs tariffs. A reduction in tariffs may increase the inflow of imported goods and considerably increase competition on the domestic market, forcing domestic goods off the market. That is why it’s suggested that tariffs should be changed gradually, especially in the aircraft and automobile industries. Agriculture needs direct governmental subsidies. The problem is especially urgent for Tatarstan, as 18% of the total production volume falls on the republic’s agricultural sector.

Enterprises involved in selling raw materials are more optimistic about the future than those connected with the light industry, which is a bad competitor to the developed European industry producing mass consumption goods. However, ordinary consumers may only benefit from it.

Certification and standardization of goods, knowledge of the international legislation, high-quality management and marketing – these are the requirements of the future. And how Russia will stand the upcoming changes mostly depends upon those specialists whom our educational institutions turn out.